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Nike announces financial results

Nike

NIKE, Inc. reported revenue of US$12.3 billion, up 96 percent compared to prior year, for its fiscal 2021 fourth quarter and full year ended 31st May, 2021.

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“NIKE’s strong results this quarter and full fiscal year demonstrate NIKE’s unique competitive advantage and deep connection with consumers all over the world,” said John Donahoe, President & CEO, NIKE, Inc.

“FY21 was a pivotal year for NIKE as we brought our Consumer Direct Acceleration strategy to life across the marketplace. Fueled by our momentum, we continue to invest in innovation and our digital leadership to set the foundation for NIKE’s long-term growth,” continued Donahoe.

Nike’s fourth quarter revenue growth was led by higher wholesale shipments due to the annualization of COVID-19 related physical retail closures in the prior year in North America, EMEA and APLA. As physical retail re-opened, NIKE Brand Digital continued to deliver strong revenue growth of 41 percent versus prior year and 147 percent compared to the fourth quarter of 2019.

North America delivered record revenues, up 141 percent on a reported basis for the fourth quarter, up 29 percent compared to the fourth quarter of 2019, including increased wholesale revenue due to delayed shipments from the previous quarter. As markets re-opened and sport returned, North America Digital growth continued to be strong, increasing 54 percent versus prior year and 177 percent compared to the fourth quarter of 2019.

EMEA’s fourth quarter reported revenues increased 124 percent, up 21 percent compared to the fourth quarter of 2019, despite temporary COVID-19 related store closures throughout the quarter. As physical retail was temporarily closed, EMEA Digital fourth quarter sales increased 40 percent, or 170 percent compared to the fourth quarter of 2019. Today, approximately 99 percent of stores in EMEA are open or operating on reduced hours.

The full year NIKE, Inc. revenues increased 19 percent on a reported basis or 14 percent compared to fiscal year 2019, reflecting growth across all Geographies and Converse, including seven consecutive years of double-digit, currency-neutral growth for its Greater China business.

“NIKE’s brand momentum is a testament to our authentic consumer connections, digital strength and continued operational execution,” said Matt Friend, Executive Vice President and Chief Financial Officer, NIKE, Inc.

“As we advance our consumer-led digital transformation, we are building a new financial model that will continue to fuel long-term sustainable, profitable growth for NIKE,” continued Friend.

Revenues for NIKE, Inc. rose 96 percent to US$12.3 billion, up 88 percent on a currency-neutral basis, largely driven by the recovery of our business operations due to the impact of COVID-19 in the prior year.

Revenues for the NIKE Brand were US$11.8 billion, up 88 percent to prior year on a currency-neutral basis, driven by triple-digit growth in its wholesale business and strong double-digit growth in NIKE Direct.

Revenues for Converse were US$596 million, up 85 percent on a currency-neutral basis, led by strong marketplace demand in North America and Western Europe.

Gross margin increased 850 basis points to 45.8 percent, primarily due to annualizing the impacts of COVID-19 including lower factory cancellation charges, lower inventory obsolescence reserves as well as the favorable rate impact of supply chain fixed costs on a higher volume of wholesale shipments. The increase in gross margin also reflects favorable margins in our NIKE Direct business.

Selling and administrative expense increased 17 percent to US$3.7 billion.

Demand creation expense was US$997 million, up 21 percent, primarily due to the return of sport and brand events driving increased advertising and marketing expense as well as digital marketing investments.

Operating overhead expense increased 16 percent to US$2.7 billion, due to an increase in wage-related expenses, higher strategic technology investments and Nike Direct variable costs, partially offset by lower bad debt expense.

The effective tax rate was 18.6 percent compared to 1.7 percent for the same period last year caused by a change in the proportion of earnings taxed in the U.S. related to recovery from the impact of COVID-19 and decreased benefits from discrete items.

Net income was US$1.5 billion, and Diluted earnings per share was $0.93 compared to a net loss for the fourth quarter of 2020 of $790 million and a net loss per share of $0.51.

Revenues for NIKE, Inc. increased 19 percent to US$44.5 billion, up 17 percent on a currency- neutral basis. Revenues for the NIKE Brand were US$42.3 billion, up 17 percent on a currency-neutral basis, driven by growth across NIKE Direct and wholesale, double-digit growth across footwear and apparel, with growth led by Sportswear and the Jordan Brand.

NIKE Direct revenues were US$16.4 billion, up 32 percent, or 30 percent on a currency-neutral basis, led by 64 percent, or 60 percent on a currency-neutral basis, growth in NIKE Brand Digital, with all geographies growing strong double-digits. Despite temporary store closures across the marketplace due to COVID-19, comparable store sales grew 4 percent.

Revenues for Converse were US$2.2 billion, up 16 percent on a currency-neutral basis, led by strong double-digit sales growth in our digital business.

Gross margin increased 140 basis points to 44.8 percent, primarily due to annualizing the impacts of COVID-19 including lower factory cancellation charges, lower inventory obsolescence reserves as well as the favorable rate impact of supply chain fixed costs on a higher volume of wholesale shipments. The increase in gross margin also reflects higher full- price product margins across wholesale and NIKE Direct

Selling and administrative expense decreased 1 percent to US$13.0 billion. Demand creation expense was US$3.1 billion, down 13 percent to prior year, primarily due to lower marketing and advertising expenses for our brand events and retail operations, as well as lower sports marketing expenses as sporting events were postponed due to COVID-19. This activity was partially offset by higher digital marketing investments.

Operating overhead expense increased 4 percent to US$9.9 billion due to an increase in strategic technology investments, higher Nike Direct variable costs and approximately $260 million in restructuring-related costs, partially offset by lower bad debt expense and lower travel and related expenses.

The effective tax rate was 14 percent, compared to 12.1 percent for the same period last year, due to decreased benefits from discrete items such as stock-based compensation.
Net income was US$5.7 billion, and Diluted earnings per share was US$3.56, up 123 percent.

Inventories for NIKE, Inc. were US$6.9 billion, down 7 percent compared to the prior year period, driven by strong consumer demand as we return to healthy inventory levels across markets closed in the prior year due to COVID-19.

Cash and equivalents and short-term investments were US$13.5 billion, US$4.7 billion higher than last year, primarily due to proceeds from net income partially offset by cash dividends.

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NIKE has a strong track record of investing to fuel growth and consistently increasing returns to shareholders through dividends and share repurchases, including 19 consecutive years of increasing dividend payouts. In fiscal 2021, the Company returned approximately US$2.3 billion to shareholders, including:

Dividends of US$1.6 billion, compared with US$1.5 billion in fiscal 2020. Share repurchases totaling approximately US$650 million for fiscal 2021, reflecting 4.9 million shares retired as part of the four-year, US$15 billion program approved by the Board of Directors in June 2018.

During the fourth quarter of 2021, NIKE, Inc. resumed share repurchase activity. As of 31st May, 2021, a total of 50 million shares for US$4.7 billion had been repurchased under this program.